DITM Iron Condor

[OptionSeeker]

Since he said a good risk:reward ratio, I assume he's talking about a reverse IC (short condor equivalent).

I always get confused with the terminology of long or short IC, so I just say the condor equivalent or whether it's a positive theta position or not.

 

[jones247]

Quote from wayneL:

Confused

So you are long the wings?

IC - short the wings
Reverse IC - long the wings

 

[dagnyt]

Quote from jones247:

IC - short the wings
Reverse IC - long the wings

IC = long the wings in my world.

Buy the iron condor = selling the put and call spreads. We've had this discussion before, and there is no resolution.

This is a topic of disagreement with no authority to settle the issue.

I've asked the OCC and CBOE to make a 'ruling,' but to no avail.

Mark

 

[heiasafari]

I agree with Mark

A IC HAS to be long the wings, this is a credit outfit guys...

Also it is right that this has been discussed, the risk profile is the same, IMO you go with the highest % of being filled by the MM and thats it.

 

[spindr0]

Quote from jones247:

Most strategies involving IC that I've read, assumes OTM or ATM IC spreads. I'm considering DITM Iron Condor spreads on the RUT (or other European Style Options). Perhaps it would be worth doing it with high IV stocks as well. It's seems to be a high probability, low risk trade...

There are a number of problems with your strategy.

Deep ITM will have more slippage (larger spreads). The number of transactions (commissions) will likely be higher since all legs are ITM. You have the potential to save on commissions only if the legs (short) are OTM and expire. Early exercise will be an issue with ITM.

High IV stocks will be a disadvantage if there's an IV contraction since it will affect your long legs more than the wings. Therefore earnings announcements will be a negative in that aspect (tho positive in re movement toward a long strike).

There wll be no icing on the cake from time decay since TP paid for the body will be more than for the wings.

Now if you want an advantage on time decay, IV contraction and price movement (to a pont) post earnings then look at ratioing the wings.

 

[jones247]

Quote from dagnyt:

IC = long the wings in my world.

Buy the iron condor = selling the put and call spreads. We've had this discussion before, and there is no resolution.

This is a topic of disagreement with no authority to settle the issue.

I've asked the OCC and CBOE to make a 'ruling,' but to no avail.

Mark

I was not complete...
ITM IC = short wings
OTM IC = long wings

 

[donnap]

Quote from jones247:

I was not complete...
ITM IC = short wings
OTM IC = long wings

Hmmm...odd use of ITM and OTM.

It seems logical to me that a long IC is net long premium. Oh well...

How about debit IC and credit IC?